Payer, state issues slow dual-eligible reform

States seeking to launch managed-care plans combining Medicaid and Medicare benefits for low-income, disabled people are facing an uphill effort finding health plans willing and able to participate.

That's because not enough plans are prepared to offer services for these complex, high-cost patients, they fear the program imposes too much financial risk, and they are deterred by what they see as the inflexibility of the CMS' star-rating system, experts say.

These issues have slowed the implementation of the CMS' three-year Financial Alignment Initiative, a demonstration mandated by the Patient Protection and Affordable Care Act to integrate Medicaid and Medicare benefits for the nation's 9.1 million dual-eligible beneficiaries. Many experts say it's vital to better coordinate care for these patients, which cost about $319.5 billion in 2011.

“While it has taken longer than originally expected to launch the demos, it's somewhat understandable given that coordinating the financing and administrative requirements between Medicaid and Medicare is a huge undertaking,” said Jeff Myers, president and CEO of Medicaid Health Plans of America, a trade group. “If rates are not sufficiently risk-adjusted to ensure that health plans are able to meet enrollees' clinical needs, some plans may decide not to participate.”

To date, eight states have signed a memorandum of understanding with the CMS to implement integrated plans. Another 14 have submitted proposals and are waiting for approval. Four states withdrew plans to launch programs.

Dual eligibles tend to be sicker than other Medicare and Medicaid beneficiaries, with half having three or more chronic conditions and about 60% having cognitive limitations. While most are over age 65, 4 in 10 are younger, with permanent physical, mental or developmental disabilities. Often, the services duals receive are fragmented and uncoordinated because these patients fall through the cracks of the two public programs.

States are taking different approaches to which population of duals they are targeting for the integration effort. Massachusetts' One Care program will focus on those under 65, New York is focusing on duals who are disabled enough to qualify for nursing home care, and Ohio wants to include all dually eligible adults.

But some states backed out because they couldn't find enough plans to participate. Minnesota and Tennessee said part of their reasons for withdrawing was that the plans would receive lower rates than they get under the current Medicare Advantage Dual Eligible Special Needs Plan program, known as D-SNPs.

In Massachusetts, three of the original six managed-care plans that intended to offer plans, including Blue Cross and Blue Shield of Massachusetts, dropped out over payment issues a few months before enrollment began Oct. 1. As a result, the One Care program pared back its goal to serving about 90,000 duals.

“We would not have been able to adequately support the complex health needs of the dual-eligible population under the proposed rates,” said Cheryl Hammond, a spokeswoman for Neighborhood Health Plan, a plan that dropped out.

Under the demonstration, participating states are responsible for managing the Medicare and Medicaid benefits and spending for the dual-eligible beneficiaries. They will receive a capitated payment combining Medicaid and Medicare, minus agreed-upon savings, said Kip Piper, a Washington-based consultant.

This model worries some beneficiary advocates. “The focus should be on building a system of quality care and seeing what type of savings that produces, instead of assuming saving right at the front,” said Kevin Prindiville, executive director of the National Senior Citizens Law Center.

Another issue that has discouraged health plans from participating is Medicare's star-rating system, which ranks the performance and quality of Medicare Advantage plans on a scale of one to five. But if a plan has fewer than three stars, the CMS does not allow the plan to participate in a passive enrollment program, which involves randomly assigning beneficiaries to a plan if they don't select one and don't opt out. Most states are using passive enrollment. That means plans with fewer than three stars must rely on voluntary sign-ups—and participation may be less financially viable.

Plans that have the most experience in serving duals tend to have the lowest star ratings, said Jim Verdier, a senior fellow at research firm Mathematica and a former Indiana Medicaid director. That's because duals may not have the physical or mental capabilities to complete member satisfaction surveys or get regular preventive care, which contribute to the plan's star rating.

The star issue could pose problems for California and Ohio, which plan to start enrolling duals in the first few months of 2014 through passive enrollment. California aims to enroll 456,000 dually eligible adults, age 21 and older, in eight counties. Ohio plans to sign up 115,000 duals, age 18 and older, throughout the state.

California designated the not-for-profit L.A. Care Health Plan—which received 2.5 star ratings for its D-SNPs plan for the past three years—as one of two plans to serve 374,000 duals in Los Angeles County. Ohio is working with CareSource, another 2.5-star rated D-SNP provider, for three regions with 56,000 duals.

Neither plan will be able to sign people up through passive enrollment. For now, officials in both states say they intend to stand by those health plans as they work to improve their star ratings.

Follow Virgil Dickson on Twitter: @MHvdickson